Haworth Discussion Paper:

Digital TransformationPart 1 - Introducing Digital Transformation & Impact to Workplace

Big data is changing everything – how we live, work and communicate with each other. It’s offering unparalleled potential to evolve, learn and grow.

Digital technologies have already transformed how we shop, read, listen to music, and access standard household services and utilities. Now, in the workplace, they’re increasing opportunities for forward thinking organisations to boost growth, increase productivity and promote collaboration, interconnection and interaction.

Steady advances in digital technology’s power (computer power and interconnectivity) have spawned a wealth of emerging tech, including artificial intelligence, data analytics, autonomous machines and computing in the cloud. To stay in step with customer expectations and stay ahead of competitors, organisations must also evolve.

“With rising real estate costs and high competition for the best talent, the workspace is an asset that can support an organisation’s overarching business strategies,” says Henning Figge, Haworth’s Vice President & General Manager International Operations. “In the digital environment, a lack of continuous workplace innovation will inevitably result in sub-optimised spaces, higher costs and potential loss of talent. The leading companies of the world simply cannot let it happen,” he adds.

“In the digital environment, a lack of continuous workplace innovation will inevitably result in sub-optimised spaces, higher costs and potential loss of talent. The leading companies of the world simply cannot let it happen.”

- Henning FiggeVice President & General Manager International Operations | Haworth

Workplace at a crossroad.

Enter digital transformation.

Digital transformation heralds a massive shift in the workplace. It’s about adopting, harnessing and integrating digital tools and strategies to achieve an organisation’s goals better. It’s complex, multifaceted and it’s changing how we work together and deliver value for our clients.

According to a recent report by the World Economic Forum’s Digital Transformation Initiative, “Digitalisation has the potential to deliver immense benefits for consumers, society and the environment.” 1

The study shows digitalisation has the potential to generate immense value (around $100 trillion) for industry over the next decade, with the benefit to society even higher. Meanwhile, Australia’s IDG has estimated enterprises will have spent over $2 trillion on digital transformation by the end of 2019 – that’s around 40% of all technology spending. 2

“Emerging technologies are quickly augmenting and replacing traditional work practices to become faster and more efficient... reshaping how work is done, where its done and by whom.”

- Glen FosterVice President Sales Asia Pacific & Brand Marketing International | Haworth

“Emerging technologies are quickly augmenting and replacing traditional work practices to become faster and more efficient,” explains Glen Foster, Haworth Vice President, Sales - Asia-Pacific. “The Internet of Things (IoT), Artificial intelligence (AI), augmented and virtual realities (AR/VR) are reshaping how work is done, where it’s done and by whom.”

“We can conceive “digital” as a new, extremely flexible and versatile material, or as a new toolbox, or as a new organ that we humans didn’t have before,” adds Robert Mokosch-Wabnits, former Workplace Strategist on Haworth’s Ideation Team in Germany. “It’s like getting a third arm or a brain extension – new abilities await discovery, and we need to find out what they are there for and how to apply them,” he says. “It’s about observing closely, sometimes imitating, reflecting, and trying new skills without fear. It’s like learning to walk – you initially stumble, fall and hurt yourself. But, in the end, you’ll not only be able to walk without effort but race forward.”

1 World Economic Forum & Accenture (January 2017). Unlocking Digital Value to Society: A new framework for growth, http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/files/pages/files/dti-unlocking-digital-value-to-society-white-paper.pdf2 https://www.idg.com.au

Digital transformation has already changed the rules of competition. As Forrester’s Nigel Fenwick asserts, by 2020 all companies will be either a digital predator or digital prey.3 Those who’ve digitally transformed their business will seize the market share of organisations who lag behind.

Currently, only 38% of enterprise businesses have digital strategies in place, compared to 55% of start-ups. George Westerman, principal research scientist with the MIT Sloan Initiative on the Digital Economy, suggests this might have something to do with larger organisations finding it more challenging to switch from a formal, rigid workplace hierarchy to a collaborative, communicative, transparent workplace sans silos.4

Digital predator or digital prey.

“Asking why your organisation should embrace digital transformation is like asking whether we should be mindful of our environment or keep driving towards a cliff’s edge,” says Francois Brounais, Haworth’s Vice President, Sales - Western Europe, Middle East & Africa. “It’s a choice between embracing change to secure our future or becoming a dinosaur.”

There’s no choice for businesses but to opt for digital transformation. Digital Transformation is no longer new territory. It’s a natural force – what can be digitised will be digitised. While the majority of organisations are lagging, the early adopters – the ‘big players’ – are growing fast.

“Asking why your organisation should embrace digital transformation is like asking whether we should be mindful of our environment or keep driving towards a cliff’s edge.”

- Francois BrounaisVice President, Sales - Western Europe, Middle East & Africa | Haworth

“Early adopters are finding they can use big data to understand client and supplier requirements better and synchronise processes to suit. Critical business decisions are based on assured facts based on measurable data.”

- Maik HaenelVice President, Sales Central & Eastern Europe | Haworth

Indeed, embracing a digital future sooner rather than later leads to better gross margins, earnings and net income, according to one Harvard Business School article – to the tune of 55% three-year average gross margins compared to just 37% for digital laggards. Leaders also outstrip laggards in three-year average earnings (16% vs.11%) and three-year average net income (11% vs 7%).5

Customer expectations, new economic realities and revenue sources, population shifts, and environmental disruption are making adoption of emerging digital technologies an imperative. It’s an issue of survival.

“By replacing repetitive tasks, digital allows staff to focus on more intuitive, creative work,” explains Maik Haenel, Haworth’s Vice President, Sales – Central & Eastern Europe.

3 Byron Connolly (26 May 2014 12:27). Will your business be a digital predator or prey? https://www.cmo.com.au/article/545992/will_your_business_digital_predator_prey_/4 Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron, Natasha Buckley, (05 June 2018). Coming of Age Digitally: Learning, Leadership and Legacy, Deloitte Insights https://www2.deloitte.com/insights/us/en/focus/digital-maturity/coming-of-age-digitally-learning-leadership-legacy.html5 Clint Boulton, “Digital laggards’ must harness data or get left behind.” CIO (21 September 2016 06:28 am PT)

“Early adopters are finding they can use big data to understand client and supplier requirements better and synchronise processes to suit. Crucial business decisions are based on assured facts based on measurable data.”

“Creating more agility in the workplace is critical to enable an organisation to pivot their business model to capture new opportunities, more efficiently,” adds Glen Foster. “The primary benefit of digital transformation is to make better decisions, more quickly.”

It’s easy to fixate on what’s digital in ‘digital transformation’ – that is, the tools, platforms and processes. And yet it’s not only about the technology we’re using to get more work done. The transformational element of the equation is just as vital.

In a narrower sense, digital transformation is the application of the latest information technology, tools and data along the value chain and business processes. It’s also a human shift that increases competitiveness and speed to market using algorithms, artificial intelligence and predictive indexes to inform the decision-making process substantially.

The new digitally-enabled workplace requires a radical rethinking of how you use big data to challenge the status quo, maintain an agile workforce and adjust performance to meet changing demands.

The human element is key.

Digital transformation isn’t just about leaving our analogue ways behind, it’s about rethinking and transforming your business model to leverage digital technology in a way that will bring innovation, operational flexibility, process optimisation and much-improved end-to-end customer experience.

Solving the internal workforce challenges of digital transformation are equally as necessary, and that means radically changing how your organisation approaches its most valuable resource – your people.

According to Mark Knickrehm and Eva Sage-Gavin, the vast amounts of data currently being generated in workplaces have the power to unlock the true potential of their people, spurring greater agility, productivity and innovation while improving their daily working lives.6

Digital transformation is about rethinking and transforming your business model to leverage technology in a way that will bring innovation, flexibility, optimisation and improve customer experience.

“Digital transformation is transforming organisations ability to maintain and establish a competitive advantage by accelerating connectivity, enabling data-based decisions to be made quickly,” adds Henning Figge.

Stefan Rief, Managing Director – Head of Organisational Development and Work Design at Fraunhofer Institute for Industrial Engineering, agrees. “Digital transformation brings great opportunities for people, but also great fear,” he says. “I’m convinced it’s one of our essential tasks to make it a positive experience for our people, too.”

Although it looks different in every organisation, there are a few fundamental characteristics all successful digitally transformed businesses share:

• Collaboration: Teams at all levels of an organisation begin working together to achieve a shared vision. As work becomes more meaningful, more engaging and there’s more transparency business-wide, your organisation evolves organically to meet new market demands.

• Culture: Digital transformation won’t change what your business does but how you do it. It’s about encouraging a more connected workplace culture. Gone are siloed offices. In their stead are non-traditional workplace structures and hierarchies where more mobile employees are empowered to continuously learn and experiment with innovative ideas and ways of working that create value for greater strategic success.

• Cloud-enabled: Data in the cloud means organisations can be more agile, reduce operating and infrastructure costs, streamline services to clients and allow their teams to work from anywhere. Collecting and analysing data about client behaviour and team performance helps you streamline services and accurately gauge what’s working best and where.

• Constant: It’s a fait accompli that the pace of technological evolution will proceed unabated – digital transformation helps you stay ahead of the curve by providing continually measurable data that helps your people adapt, learn and grow.

“Digital businesses that demonstrate these characteristics engage their employees through greater transparency, continuous learning opportunities and open communication”. Dr Sean Gallagher, Director Centre for the New Workforce at Swinburne University of Technology says “to prepare for the ever-changing digital future, workers prefer ‘learning on the job’ over formal training. We need to integrated learning into the workplace, especially in continuously changing, digitally-enabled environments.7”

However, it’s not without its challenges. Digital transformation is changing the way people work and the type of work they do. It promises to disrupt a third of all jobs, redefine problem-solving and cause us to re-prioritise relationship skills such as communication, listening, interpreting and design.

Stefan Rief believes digital transformation will change us in three ways. “Our work will change massively through automation and machine learning, our workplaces and their use will change through cognitive environments and, of course, the tools we use will also change,” he argues. “With artificial intelligence, the division of tasks will change – AI will take over and perform tasks automatically, but it will also help us solve tasks better by giving us better data for decision making.”

6 Mark Knickrehm & Eva Sage-Gavin, “Decoding Organisational DNA” https://www.accenture.com/au-en/insights/future-workforce/workforce-data-organisational-dna

7 Sean Gallagher (June 2019). Peak Human Potential: Preparing Australia’s workforce for the digital future . https://www.swinburne.edu.au/new-workforce/

“To prepare for the ever-changing digital future, workers prefer ‘learning on the job’ over formal training. We need to integrated learning into the workplace, especially in continuously changing, digitally-enabled environments.”- Dr Sean GallagherDirector Centre for the New Workforce at Swinburne University of Technology

All these changes are having an inevitable impact on the physical workplace. “The evolution of work styles is, in large part, a direct result of the changes generated by digital transformation,” explains Francois Brounais. “This is quite a recent phenomenon, and it’s not clear yet what the end result will be for each organisation.”

Digital data is helping organisations to address their geographic and physical work limitations. “It creates predictive, organic spaces that increase a team’s performance, reduces the need for experimentation and decreases costs over time” says Glen Foster. “While the traditional office is still required for social contact and face-to-face interactions, technologies like cloud-based tools enable organisations to leverage the best ideas from everywhere – creating virtual teams quickly and easily by leveraging talent from both within the company and outside collaborators.”

“Internal barriers of communication and transparency are breaking down private spaces and cubicles.”, agrees Maik Haenel. “Soon we’ll see a shift from dedicated single-use workstations to collaborative social spaces that support communication and therefore speed up information flow.”

Organisations can bring people together by providing a variety of work-settings to optimise productivity, accommodate a shifting mix of occupants (including permanent teams, contingent employees and external collaborators), and fostering flexible, connective and sharing spaces.

“New cognitive workplaces will get to know how each of us works, automatically optimising our environment for peak performance – by changing the room temperature, lighting and scents to create optimal settings concentrated and healthy work, whatever the task,” explains Stefan Rief. “And the office itself will be able to plan and precisely simulate processes based on knowledge gained from real-time and long-term usage data. I find this prospect so exciting.”, he enthuses.

How digital transformation impacts the workplace.

“Work environments will be increasingly measured by sensors. Settings and applications will be arranged on demand and utilisation will be based on data analysis, activating new service models and spaces.”

- Maik HaenelVice President, Sales Central & Eastern Europe | Haworth

Haworth has developed an innovative framework to support our clients’ efforts to maximise the value that digitisation can deliver. We’ve brought to bear over seventy years of global experience in workplace design to create digital platforms that enrich your insights into workspace evolution.

In the process, we’ve put together the puzzle pieces of digital transformation to deliver deeper, more integrated support for your workplace journey and help you make faster, more informed decisions in the workplace.

By introducing a range of digital tools, sensors and feedback systems, Haworth helps organisations collect and analyse real-time workplace data to understand how to inspire their people to do their best work.

Leveraging this data has the power to speed up decision making to confirm, validate and assess over time the performance of space.

“Both the process to procure and maintain office furnishings as well as the workspace itself becomes more intelligent through the digitalisation,” says Henning Figge. “Creating ‘smart furniture’ and ‘smart spaces’ with sensors and other utilisation measurement tools makes them able to communicate with users, facility managers and building owners. We’re developing workspaces to generate data to improve planning and results immediately while continuously optimising the environment following installation.”

“Work environments will be increasingly measured by sensors. Settings and applications will be arranged on demand and utilisation will be based on data analysis, activating new service models and spaces,” says Maik Haenel, describing Haworth’s new suite of digital tools.

Organisations can review settings in real-time and readjust quickly and efficiently as their people’s work-styles change. “Workplaces can, therefore, be very flexible so they can future-proof their business,” explains Francois. “Organisations can constantly monitor users’ behaviour and needs, so they can continuously adapt and support new ways of working as they evolve.”

Haworth smart technologies give you complete confidence and control over workplace decisions and processes. “Aggregation of sensor data from multiple sources improves learning and speeds up decision making,” Maik says. “Digital transformation fosters more relevant workplaces over the lifecycle of a space.”

Smart sensors and digital tools also increase the performance of a space to support competitive advantage and create value. “There’s always pressure to improve the efficiency of a workplace and reduce real estate costs,” explains Henning. “We’re developing tools to make this easier for our clients.”

Digital technologies – and the ways we use them socially, in our personal lives and at work – have changed the face of business. Haworth is spearheading the way towards data-driven workplace planning and learning because we believe this is the only way to ensure continuous improvement in workplace design. You could say we’re developing a toolset for the future of digital transformation, today.

The future and beyond.

“The evolution of work styles is, in large part, a direct result of the changes generated by digital transformation.”

- Francois Brounais

“There’s always pressure to improve the efficiency of a workplace and reduce real estate costs. We’re developing tools to make this easier for our clients.” - Henning FiggeVice President & General Manager International Operations | Haworth

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